Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Provision for Federal & Foreign Income Tax Expense

Our provision for federal and foreign income tax expense for continuing operations consisted of the following (in millions):

	2012			2011			2010
Federal income taxes:
Current		$	387		$	912		$	600
Deferred			925			9			561
Total federal income taxes			1,312			921			1,161
Foreign income taxes:
Current			14			38			8
Deferred			1			5			(5	)
Total foreign income taxes			15			43			3
Income tax expense		$	1,327		$	964		$	1,164

Reconciliation Of Income Tax Expense Computed Using The U.S. Statutory Federal Tax Rate To Actual Income Tax Expense

Our reconciliation of the 35% U.S. federal statutory income tax rate to actual income tax expense for continuing operations is as follows (in millions):

	2012				2011				2010
Income tax expense at the U.S. federal statutory tax rate		$	1,425			$	1,271			$	1,322
Increase (decrease) in tax expense:
U.S. manufacturing activity benefit			(29	)			(106	)			(110	)
Tax deductible dividends			(73	)			(62	)			(56	)
Research and development tax credit			—				(35	)			(43	)
IRS appeals and audit resolution			—				(89	)			(10	)
Medicare Part D law change			—				—				96
Other, net			4				(15	)			(35	)
Income tax expense		$	1,327			$	964			$	1,164

Components Of Federal And Foreign Deferred Tax Assets And Liabilities

The primary components of our federal and foreign deferred income tax assets and liabilities at December 31 were as follows (in millions):

	2012		2011
Deferred tax assets related to:
Accrued compensation and benefits	$	909	$	843
Pensions		5,117		4,578
Other postretirement benefit obligations		433		487
Contract accounting methods		853		806
Sale of discontinued operations		—		69
Foreign company operating losses and credits		34		31
Other		284		305
Valuation allowance (a)		(8)		(14)
Deferred tax assets, net		7,622		7,105
Deferred tax liabilities related to:
Goodwill and purchased intangibles		402		369
Property, plant, and equipment		604		638
Exchanged debt securities and other (b)		544		379
Deferred tax liabilities		1,550		1,386
Net deferred tax assets (c)	$	6,072	$	5,719

^(a)  A valuation allowance has been provided against certain foreign company deferred tax assets arising from carryforwards of unused tax benefits.

^(b)  Includes deferred taxes associated with the exchange of debt securities in 2012 (Note 8) and prior years.

^(c)  Includes net foreign current deferred tax liabilities, which are included on the Balance Sheets in other current liabilities.